Third Prize: You’re Fired

In the movie Glengarry Glen Ross, Alec Baldwin walks into the office of underperforming salesmen and shakes them to their core. He’s the guy from the head office, and his motivational speech has a whiff of sulfur to it. The top prize for sales that month, he announces, will be a new Cadillac. The second prize: a set of steak knives. As for the third prize, he informs them with a certain twinkling malice, “You’re fired.” One of the salesmen in the audience, Ed Harris, leans back in his chair — he’s not buying it. Baldwin takes off his watch, puts it on Harris’s desk, and says that it costs more than the Hyundai that Harris drove to work. “I made $970,000 last year,” Baldwin practically spits at him. “That’s who I am. And you’re nothing.”

Welcome to capitalism at its most basic: we must sell to survive, competition is everything, and our worth is measured solely by our paycheck. David Mamet debuted his bleak play in 1984, during the onset of Reagan-era excess, and the movie came out in 1992 with capitalism in global ascendance. Twenty years later, the dog-eat-dog free market is still with us. A good playwright could update Glengarry Glenn Ross by replacing Mamet’s sellers of dubious real estate with the private contractors gulling workers in the Third World into taking what turns out to be indentured servitude in fast food restaurants and barbershops at U.S. military bases in Iraq and Afghanistan.

But it won’t be David Mamet writing such a play. The playwright, who once launched stinging broadsides against corporate greed, has taken a subsequent U-turn. In a Village Voice article three years ago in which he announced that he was “no longer a ‘brain-dead liberal,’” Mamet explained that he had begun “to question my hatred for ‘the Corporations’—the hatred of which, I found, was but the flip side of my hunger for those goods and services they provide and without which we could not live.” He has further refined this line of thinking in a new book, The Secret Knowledge: “We cannot live without trade. A society can neither advance nor improve without excess of disposable income. This excess can only be amassed through the production of goods and services necessary or attractive to the mass. A financial system which allows this leads to inequality; one that does not leads to mass starvation.”

With his defense of inequality, Mamet has morphed into his own evil character from Glengarry Glen Ross. Perhaps the playwright has simply changed with the times, for we now live in a world that has become dangerously comfortable with economic extremes. The top 0.1 percent of the population has indeed won the Cadillac, increasing their income 385 percent since 1970, according to The Washington Post. The bottom 90 percent of the population has seen their income drop by 1 percent. And, as a result of the recent financial crisis, a large number of people have indeed ended up with the third prize of unemployment.

When it comes to the issue of free-trade agreements (FTAs), President Barack Obama has made a similar transformation as David Mamet, though he has not traveled so great a distance along the political spectrum. “During the presidential campaign, Barack Obama proclaimed his opposition to the NAFTA-style FTAs and boasted of his stance against the devastating North American and Central American agreements,” explains Foreign Policy In Focus (FPIF) columnist Laura Carlsen in The Audacity of Free Trade Agreements. “As candidate Obama, he carefully distanced himself from the open-market, pro-corporate policies of his predecessor, calling for significant changes to the NAFTA model, including enforceable labor and environmental standards, and consumer protections.”

But now President Obama has become a salesman. He’s not the Alec Baldwin type, of course, for that’s not his style or philosophy. The president is more like Don Draper in the TV show Mad Men: lyrical, nostalgic, persuasive. Alec Baldwin was win-lose; Obama and Draper are win-win.

The products the president is peddling are three FTAs: with South Korea, Colombia, and Panama. If we pass these FTAs, the president promises us all Cadillacs. But we’ll be lucky to get the steak knives.

On the face of it, more trade is a good thing. Remove tariffs — a kind of tax on imports — and trade goes up. The more goods that circulate in the world economy, the cheaper the price, the greater the number of jobs, the more efficient the production. At least, that’s how it works on paper.

In practice, the results of “free trade” depend on a large number of factors including the specific provisions of the agreement, the relative economic strength of the partners, and the resiliency of the respective social safety nets. And tariffs, the great enemy of free trade agreements, have often served as useful protective walls to shield infant industries, social norms, or cultural practices from the typhoons of foreign competition. FTAs also target “non-tariff barriers to trade” — an elastic category that can apply equally to targeted subsidies, high environmental standards, or legal protections for consumers — which are often the hard-won victories of social movements.

Lowering tariff walls can sometimes be a good thing, if done carefully and cooperatively, as the European Union has (more or less) done. The North American Free Trade Agreement (NAFTA) was more like a hatchet job. Yes, it managed to triple trade among the United States, Mexico, and Canada, according to conventional estimates. But the costs have been high. Much of Mexico’s small farming sector has collapsed, the outsourcing of U.S. jobs has helped to hollow out the U.S. manufacturing sector, and the environmental consequences of the Mexican maquiladora have been staggering.

There will likewise be winners and losers with the FTAs currently on the table. If the U.S.-South Korea FTA passes, for instance, the overall trade volume between the two countries will likely increase, just as it has between South Korea and the EU since they recently passed a similar agreement. Large companies will take advantage of the lower tariffs to capture bigger market shares and make larger profits. A small portion of these profits will trickle down in the form of cheaper prices for consumers and some additional jobs for some workers. But as trade increases, so will the trade-offs. Korean farmers fear that they will go the way of their Mexican counterparts; U.S. workers fear the loss of 159,000 jobs over the next seven years.

Free trade agreements are an elite game, and not just for economic actors. The scramble for FTAs is rife with geopolitics. About five years ago, for instance, the EU passed the United States on the list of South Korea’s largest trading partners. By concluding an FTA with Korea before the U.S. Congress overcomes its hesitations, the EU hopes to only increase this lead by achieving the position of “first mover.” In this way, the Europeans can quickly capture market share in, for instance, the frozen French fry sector, by taking advantage of the removal of tariffs while U.S. producers wait for Congress to make up its mind. This advantage was sufficient argument for the Europeans even though, according to the most optimistic assessment, the EU-ROK agreement would increase the GDP of the EU by less than .05 percent (with Korean GDP increasing possibly 1-2 percent). The South Koreans, meanwhile, are eager to establish some comparative advantage against their East Asian economic rivals China and Japan. They are styling themselves the Netherlands of the East: the Asian trading state nonpareil.

The EU-ROK deal, to be sure, references labor and environmental standards. Key commodities, like rice, are off the table. The Europeans managed to insert the precautionary principle into the agreement, which will dampen any unwarranted exuberance for genetically modified produce and the like. But the agreement was not exactly Green-positive. According to one British politician, “The EU put immense pressure on the Korean government to manipulate its climate emission law to allow a greater number of bigger and more polluting European cars to be sold on the Korean market.” And the agreement does not allow for the application of sanctions in the case of violations of worker rights or environmental standards; all disputes must be solved through consultation. This sounds either very civilized or very unenforceable, depending on your viewpoint.

Considerably less civilized is the agreement the United States is considering with Colombia, which last year was the deadliest country in the world to be a trade unionist. More than half of the murders of trade unionists that took place worldwide in 2010 were in Colombia. Encouraging greater U.S. investment in a country that doesn’t respect even the most basic human rights is the height of folly.

Free trade agreements appeal to our baser instincts: we want more things, and we want them cheaper. The founders of Walmart have gotten ridiculously rich by catering to this impulse. Entire countries have built their economies around this principle. Yet the world teeters on the verge of apocalypse — the destruction of wilderness, the extinction of species, the spike in global warming — because of our endless quest for more and more things. “Getting and spending, we lay waste our powers,” wrote the poet William Wordsworth more than 200 years ago. Poor William wouldn’t survive ten minutes in a room with the salesmen in Glengarry Glen Ross.

We are laying waste our powers through these FTAs, even as we delude ourselves into thinking that it’s all win-win. It’s true, of course, that we will all win something. But most of us will only get third prize, and it will come with little consolation.

Intractable Problems

The generals drone on about the importance of negotiating a solution in Afghanistan from a “position of strength.” And thus they argue for no meaningful troop reductions. But what if we redefine “position of strength” to mean something else?

“The position of strength needed to undercut the insurgency and bring it to the negotiating table has less to do with force and more to do with governance capacity and trust,” writes FPIF contributor Adam Cohen in Reduce Corruption, Defeat the Taliban. “Combating civil corruption and careless military mistakes will go a lot further in inducing the insurgency to talk than continuing the current overreliance on military force.”

Another seemingly intractable problem is the confrontation between Israel and Palestine. Negotiators frequently insist that there is no alternative to negotiations between the two sides. But as FPIF contributor Didier Jacobs points out, other alternatives abound, not all of them particularly palatable. “For Israelis, the alternative is the status quo,” he writes in Breaking the Israel-Palestine Impasse. “The peace process has already delivered what they want: security. The Palestinian Authority cooperates with Israeli security services. The West backs the isolation of Hamas. The number of Israeli victims of terrorism has fallen to a dozen a year, but the prospect of a final settlement and ultimately reducing that number to zero has proved insufficient to make concessions for peace.”

Then there’s the misogyny of the Saudi state. But Saudi women are continuing their struggle to change all that. “In June the Women2Drive campaign, a concerted effort of Saudi women bloggers and activists deeply rooted in social media, was launched to overturn the driving ban,” writes FPIF contributor Jessica Mack in Saudi Women Get Behind the Wheel. “As if the full list of rights demanded by the Saudi Women Revolution back in April was too overwhelming for the world to comprehend, it seems that narrowing the campaign to focus on driving as an entry point has proved a powerful advocacy tool that has quickly garnered global media attention and support.”